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How to dollar-cost-average with a large amount of money in a savings account? | I up voted JoeTaxpayer but i would like add a couple of things. Dollar Cost averaging over a 5 day period is in no way practical. If you get a 1% swing in that time that would be quite a lot. Personally I think 5 years is way to long. When markets go down they go down fast. I would suggest 1 to 2 years investing quarterly. I would hate seeing you miss out on market gains for a 5 year period on the last of your money. The whole point of Dollar Cost averaging instead of market timing is the mantra "Its about time in the market not timing the market" So if you have money on the sidelines for years you are missing out on your time in the market. |
Tracking the Madrid Interbank Offered Rate (MIBOR) and the Euro Interbank Offered Rate (EURIBOR) | You can find both here: http://www.bde.es/tipos/tipose.htm |
Buy tires and keep car for 12-36 months, or replace car now? | There are a few factors I like to consider when I'm reasoning financially over my households cars. How many KMs will the car travel each year because I like to factor in how often tires will need to be changed, how much tires for my models cost as well as how gas efficient they are. Knowing how much the car is driven and in what environmental/road conditions is also important factors to know because that will help guestimate possible repairs cost. Also possible taxes should be taken in to consideration. For example a few years ago I had a diesel Citroen C5 that had yearly taxes of roughly 500$. The replacement costs only 150$ a year in taxes. So switching cars 3 years early would have saved me 1050$ in taxes. So some information on possible taxes, how far you drive each year, what environmental conditions, type of driving (daily long rides or just short etc..) as well as the fuel efficiency of both cars would help to better calculate your costs for say three scenarios. Car change in 12, 24 and 32 months respectively. |
How will my stock purchase affect my taxes? | Assuming you are in the US, and are an average joe, the answer to your question is no. Investment costs do not reduce your taxable income for the year you make the investment. They do factor in to the cost basis of your investment and so will affect your taxes in the year you sell the investment. If you want to reduce your taxable income, you could contribute the $5000 to a traditional ira, or 401k, assuming you qualify. Depending on where the account is held, you may then be able to use that $5k to purchase stock in the company you are interested in. The stock would be held in your IRA or 401k account, and would be subject to more restrictions than a normal brokerage account. |
Why would analysts recommend buying companies with negative net income? | The biotechnology sector as a whole is a popular buy recommendation among some analysts these days for a few reasons. Some analysts feel that the high costs in R&D, even without much profit, are a positive sign for growth because it means a company is working towards finding the next "blockbuster drug" or the next class of such drugs. There haven't been many new classes of blockbuster drugs since the development of SSRI's and statins, and many of the new drugs that have been developed have been tweaks to existing classes of drugs. Some analysts feel that "it's about time" for a new class of blockbuster drugs to hit the market. A new blockbuster drug means significant profits for the company that develops it; a new class of blockbuster drugs means significant profits for the whole industry. Since about 2009, the Food and Drug Administration has been more lenient in its approval of new drugs. This wave of new approvals has reduced R&D costs for companies because they don't need to go back to the lab or earlier phases of clinical trials and continually tweak their drugs in order to gain approval. This has also made some analysts optimistic. Genetic engineering is considered an up-and-coming field with potentially significant applications to the pharmaceutical industry. Advances in this field may increase profits for the pharm industry, but since biotech companies are often the ones producing the engineering equipment, research, etc. such advances could be a major source of revenue for the entire biotech industry. In the US and in the developed world as a whole, the elderly population is growing, and since people consume more medicine as they grow older, this could lead to higher profits for companies involved in the production of pharmaceuticals (which includes biotech companies, of course) in the long run. In the US, the passage of the Patient Protection and Affordable Care Act expanded insurance coverage, which gives more people the means to afford pharmaceuticals. Also, in general, people consume more healthcare services when they have insurance (this is called moral hazard), so some analysts expect that the expansion of insurance coverage will only lead to more profits for the pharmaceutical industry and biotechnology firms in general. The global food crisis. As the climate changes, companies like Monsanto, which use various forms of genetic engineering to produce crop strains that can survive in increasingly hostile environments, look more and more appealing to places that need crops designed to grow in such environments. Any methods that could increase yields look increasingly popular, and biotechnology companies often market such methods. (As a side note, I know Monsanto is a contentious example, and there are a lot of misconceptions about "genetically modified food" and the genetic engineering methods they do, so I won't get into a debate about that). In general, technology is a popular subject right now. I've read analyst reports (from analysts that clearly don't follow the biotech sector) that base their forecasts for the biotech sector on the activities of companies like Dell, Zynga, HP, LinkedIn, Facebook, etc. Clearly, it's problematic when an analyst sees the word "technology" and automatically assumes that the biotech sector is responsive to the same factors as social media firms, hardware manufacturers, etc. This isn't to say that the biotech sector is completely isolated from this, but when I read a report that talks about Facebook's IPO being bad news for companies like Gilead Sciences without mentioning upcoming FDA decisions about Gilead's products or any biotech-specific factors, I'm not convinced the analyst has performed due diligence. I keep using the phrase "some analysts" because I want to stress that the opinions stated above aren't universal. Although they're popular, not everyone is so optimistic. Also, I don't want you to see these reasons and think that I'm making a buy recommendation, because I'm not. I'm not making a recommendation one way or another. I'm happy to clarify my answer too; I follow the biotechnology sector extensively. If you want to get a rough feel for the daily movements of the sector as a whole, a good place to start is IBB, the iShares Nasdaq Biotechnology Index Fund. The four largest holdings are Regeneron, Gilead Sciences, Amgen, and Celgene, which are all big players in the industry (obviously). These are a little different from the big name pharma companies like Pfizer, Merck, Novartis, etc. but they're still considered pharma companies. It's also worthwhile to follow the FDA press announcements. By the time the news is published there, it's probably already leaked or known to people in the industry (the biotech/pharm sectors are rife with accusations of insider trading), so you might not find trading opportunities, but it's important to get familiar with the information the releases contain if you want to know more about the industry. Volatility trades are always popular trades around FDA drug approvals. |
Using a FOREX platform to actually change money | FX trading platforms are not used for exchanging money, they are used for trading currencies. "I know there are cheaper services like transferwise, charging about 0.5 %, but there is little/no control over the exchange rate, you just get the rate at the time of execution." With FX trading you don't have control of the exchange rate either, just like the share market, FX markets are determined by supply and demand of one currency over an other. So an individual does not have control over the exchange rate but will just get the rate at the time of the trade being executed. |
What evidence is there that rising interest rates causes Canadian condo prices to go down? | If money is more expensive (costs more to borrow) then fewer people will be able to qualify to make the payments for a particular size of mortgage. This reduces the number of potential buyers for property at that price. As sellers still want to sell, they will move their prices down to where more people can afford to buy. So rising interest rates create downward pressure on housing prices. But Toronto is the biggest city in Canada. I'd expect part of the high prices there is the location: lots of people want to be close to lots of activities, action, and opportunity. Unless something catastrophic happens, I don't see Toronto losing that advantage. If anything, it's going to get a tad warmer up there in the coming decades. |
Why did the stock chart for Facebook's first trading day show an initial price of $42 when the IPO price was $38? | I'd add, this is actually the way any stock opens every day, i.e. the closing price of the prior day is what it is, but the opening price will reflect whatever news there was prior to the day's open. If you watch the business news, you'll often see that some stock has an order imbalance and has not opened yet, at the normal time. So, as Geo stated, those who were sold shares at the IPO price paid $38, but then the stock could open at whatever price was the point where bid and ask balanced. I snapped a screen capture of this chart on the first day of trading, the daily charts aren't archived where I can find them. This is from Yahoo Finance. You can see the $42 open from those who simply wanted in but couldn't wait, the willingness of sellers to grab their profit right back to what they paid, and then another wave of buying, but then a sell-off. It closed virtually unchanged from the IPO price. |
Stock trading models that use fundamental analysis, e.g. PEG ratios? | One idea: If you came up with a model to calculate a "fair price range" for a stock, then any time the market price were to go below the range it could be a buy signal, and above the range it could be a sell signal. There are many ways to do stock valuation using fundamental analysis tools and ratios: dividend discount model, PEG, etc. See Wikipedia - Stock valuation. And while many of the inputs to such a "fair price range" calculation might only change once per quarter, market prices and peer/sector statistics move more frequently or at different times and could generate signals to buy/sell the stock even if its own inputs to the calculation remain static over the period. For multinationals that have a lot of assets and income denominated in other currencies, foreign exchange rates provide another set of interesting inputs. I also think it's important to recognize that with fundamental analysis, there will be extended periods when there are no buy signals for a stock, because the stocks of many popular, profitable companies never go "on sale", except perhaps during a panic. Moreover, during a bull market and especially during a bubble, there may be very few stocks worth buying. Fundamental analysis is designed to prevent one from overpaying for a stock, so even if there is interesting volume and price movement for the stock, there should still be no signal if that action happens well beyond the stock's fair price. (Otherwise, it isn't fundamental analysis — it's technical analysis.) Whereas technical analysis can, by definition, generate far more signals because it largely ignores the fundamentals, which can make even an overvalued stock's movement interesting enough to generate signals. |
Theoretically, if I bought more than 50% of a company's stocks, will I own the company? | You guys seem to have forgotten the most important part of this equation ... i work for a bank and I can tell u this as a painful fact ... every business is governed by its paperwork ... articles bylaws operating agreements amendments and minutes .. if a companys paperwork says that the 51% owner can fire everyone and move to Alaska and that paperwork is proper (signed and binding) it is with minimal excavation law... case in point every company is different .. and it is formed and governed by its paperwork. |
US Taxes - Handling Capital Losses from previous years with current capital gains | No one can advise you on whether to hold this stock or sell it. Your carried losses can offset short or long term gains, but the long term losses have to be applied to offset long term gains before any remaining losses can offset short term gains. Your question doesn't indicate how long you have to hold before the short term gains become long term gains. Obviously the longer the holding period, the greater the risk. You also must avoid a wash sale (selling to lock in the gains/reset your basis then repurchasing within a month). All of those decisions hold risks that you have to weigh. If you see further upside in holding it longer, keep the investment. Don't sell just to try to maximize tax benefits. |
Confirm Dividend Yield | Is my math correct? The Math is correct, however Dividends don't work this way. The Yield is Post Facto. i.e. Given the dividend that is declared every quarter, once calculates the yield. The dividends are not fixed or guaranteed. These change from Quarter to Quarter or at times they are not given at all. The yield is 3.29% and the value is $114 per share. Assuming that the price remains exactly the same for an entire year, and that I purchase only one share, then this should be the math for calculating the yield: 114 x 0.0329 = 3.7506 What the Link is showing is that last dividend of MCD was 0.94 for Q3; that means total for a year will be 0.94*4 [3.76], this means yield will be 3.29%. Note this year there were only 3 Dividend was 0.89 on 26-Feb, 0.89 on 2-Jun and 0.94 on 29-Nov. It is unlikely that there will be one more dividend this year. So for this year the correct post facto calculation would be 0.89+0.89+.94 = 2.72 and hence an yield of 2.38% Also, are there any fees/deductions, or would I receive the amount in full, which should be $3.75? There are no fee deducted. Not sure about US tax treatment on Dividends. |
Is there any instance where less leverage will get you a better return on a rental property? | I would say that you should keep in mind one simple idea. Leverage was the principal reason for the 2008 financial meltdown. For a great explanation on this, I would HIGHLY recommend Michael Lewis' book, "The Big Short," which does an excellent job in spelling out the case against being highly leveraged. As Dale M. pointed out, losses are greatly magnified by your degree of leverage. That being said, there's nothing wrong with being highly leveraged as a short-term strategy, and I want to emphasize the "short-term" part. If, for instance, an opportunity arises where you aren't presently liquid enough to cover then you could use leverage to at least stay in the game until your cash situation improves enough to de-leverage the investment. This can be a common strategy in equities, where you simply substitute the term "leverage" for the term "margin". Margin positions can be scary, because a rapid downturn in the market can cause margin calls that you're unable to cover, and that's disastrous. Interestingly, it was the 2008 financial crisis which lead to the undoing of Bernie Madoff. Many of his clients were highly leveraged in the markets, and when everything began to unravel, they turned to him to cash out what they thought they had with him to cover their margin calls, only to then discover there was no money. Not being able to meet the redemptions of his clients forced Madoff to come clean about his scheme, and the rest is history. The banks themselves were over-leveraged, sometimes at a rate of 50-1, and any little hiccup in the payment stream from borrowers caused massive losses in the portfolios which were magnified by this leveraging. This is why you should view leverage with great caution. It is very, very tempting, but also fraught with extreme peril if you don't know what you're getting into or don't have the wherewithal to manage it if anything should go wrong. In real estate, I could use the leverage of my present cash reserves to buy a bigger property with the intent of de-leveraging once something else I have on the market sells. But that's only a wise play if I am certain I can unwind the leveraged position reasonably soon. Seriously, know what you're doing before you try anything like this! Too many people have been shipwrecked by not understanding the pitfalls of leverage, simply because they're too enamored by the profits they think they can make. Be careful, my friend. |
Does the sale of personal items need to be declared as income on my income taxes? | I doubt it. In the States you would only owe tax if you sold such an item at a profit. "garage sales" aren't taxable as they are nearly always common household items and sale is more about clearing out one's attic/garage than about profit. Keep in mind, if I pay for a book, and immediately sell it for the same price, there's no tax due, why would tax be due if I sell for a loss? |
Why does Charles Schwab have a Mandatory Settlement Period after selling stocks? | It's important to understand that, in general, security transactions involve you and a relatively unknown entity with your broker standing in the middle. When you sell through Schwab, Schwab needs to receive the funds from the other side of the transaction. If Schwab gave you access to the funds immediately, it would essentially be a loan until the transaction settles after funds and securities change hands. If Schwab made funds available to you as soon as they were received, it might still be two days until the money is received; because the other side also has three days. Guaranteed one day settlement would have to include receipt of funds from the buyer in one day and Schwab can't control that. You need to remember this transaction likely includes at least one party in addition to you and Schwab. Here's the SEC page related to the three day settlement period, About Settling Trades in Three Days: T+3 |
How should I be contributing to my 401(k), traditional or Roth? | I'm of the opinion that it doesn't matter much unless something in your life changes in retirement. And since many retirement planners assume a default income target of 80 percent of pre-retirement income, I figure many people's tax bracket isn't moving much. The most interesting reason I know to Go Roth in a 401k is limits. You can only contribute like $17k, whether Roth or not. In a traditional contribution, some of the 17k you put in goes to taxes when taken out, but in a Roth contribution you pay taxes up front. So if you have more than $17k to invest, Roth lets you sneak some more into the system. |
Why do 10 year Treasury bond yields affect mortgage interest rates? | The yield on treasury bond indicates the amount of money anyone at can make at virtually zero risk. So lets say banks have X [say 100] amount of money. They can either invest this in treasury bonds and get Y% [say 1%] interest that is very safe, or invest into mortgage loans [i.e. lend it to people] at Y+Z% [say at 3%]. The extra Z% is to cover the servicing cost and the associated risk. (Put another way, if you wanted only Y%, why not invest into treasury bonds, rather than take the risk and hassle of getting the same Y% by lending to individuals?) In short, treasury bond rates drive the rate at which banks can invest surplus money in the market or borrow from the market. This indirectly translates into the savings & lending rates to the banks' customers. |
Paid cash for a car, but dealer wants to change price | Your son is in the right. But he broke the "unwritten" rules, which is why the car dealer is upset. Basically, cars are sold in the United States at a breakeven price. The car company makes ALL its money on the financing. If everyone bought "all cash," the car companies would not be profitable. No one expected anyone, least of all your son, a "young person," to pay "all cash." When he did, they lost all the profit on the deal. On the other hand, they signed a contract, your son met all the FORMAL requirements, and if there was an "understanding" (an assumption, actually), that the car was supposed to be financed, your son was not part of it. Good for him. And if necessary, you should be prepared to back him up on court. |
Swiss-style Monetary Policy | This is what is called "weasel words". They're trying to put some authority into their ad, but since they don't have any - they're putting meaningless words that sound important. Monetary policy is the state/central bank policy to control the supply of the available currency. Cannot think of a way to connect it to private investments. |
How can I cash out a check internationally? | This question was asked three years ago, but now that it's 2017 there is actually a relatively easy, cheap and fast solution to at least the first half of your question. To cash the check: I've done this a half dozen times while abroad (from the US) without any problems. |
Trade? Buy and hold? Or both? | You mentioned three concepts: (1) trading (2) diversification (3) buy and hold. Trading with any frequency is for people who want to manage their investments as a hobby or profession. You do not seem to be in that category. Diversification is a critical element of any investment strategy. No matter what you do, you should be diversified. All the way would be best (this means owning at least some of every asset out there). The usual way to do this is to own a mutual or index fund. Or several. These funds own hundreds or thousands of stocks, so that buying the fund instantly diversifies you. Buy and hold is the only reasonable approach to a portfolio for someone who is not interested in spending a lot of time managing it. There's no reason to think a buy-and-hold portfolio will underperform a typical traded portfolio, nor that the gains will come later. It's the assets in the portfolio that determine how aggressive/risky it is, not the frequency with which it is traded. This isn't really a site for specific recommendations, but I'll provide a quick idea: Buy a couple of index funds that cover the whole universe of investments. Index funds have low expenses and are the cheapest/easiest way to diversify. Buy a "total stock market" fund and a "total bond fund" in a ratio that you like. If you want, also buy an "international fund." If you want specific tickers and ratios, another forum would be better(or just ask your broker or 401(k) provider). The bogleheads forum is one that I respect where people are very happy to give and debate specific recommendations. At the end of the day, responsibly managing your investment portfolio is not rocket science and shouldn't occupy a lot of time or worry. Just choose a few funds with low expenses that cover all the assets you are really interested in, put your money in them in a reasonable-ish ratio (no one knows that the best ratio is) and then forget about it. |
What benefits do “title search companies” have over physically visiting a land records offices? | Basically what @littleadv said, but let me amplify what I think is the most important point. As he/she says, one thing you're paying them for is their expertise. If the title on record at the county office had a legal flaw in it, would you recognize it? In a way your question is like asking, Why should I go to a doctor when I could just make my own medicine out of herbs I grow in my garden and treat myself? Maybe you could. But the doctor and the pharmacist have years of training on how to do this right. You probably don't. Is it possible for you to learn everything you need to do it right? Sure. But do you want to spend the time to study all that for something that you will do -- buy a house -- maybe once every ten years? Will you remember it all next time or have to learn it all over? But really most important is, title companies offer insurance in case the title turns out to be flawed. That, to me, is the big reason why I would use a title company even if I was paying cash and there was no bank involved to insist on it. If there's some legal flaw in the title and it turns out that someone else has a claim to my house, and I lose in court, I would be out about $100,000. Your house might be costing you much more. That's a huge risk to take. Paying the couple of hundred dollars for insurance against that risk seems well worth it to me. And by the way, I don't think the "due diligence" is easy. It's NOT just a matter of making sure a title is really on file at the court house and has the proper stamp on it. It's all about, Does someone else have a legal claim to this property? Like, maybe three owners ago someone forged a signature on a deed, so the sale is fraudulent, and now the person who was defrauded or his heirs discover the issue and claim the property. Or maybe the previous owner failed to pay a contractor who did repairs on the house, and now he goes to court and gets a lien on the property. It's unlikely that you have the expertise to recognize a forged document. You almost surely have no way to recognize a forged signature of someone you never met on an otherwise valid-looking document. And you'd have to do a lot of research to find every contractor who ever worked on the house and insure none of them have a claim. Etc. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | I will disagree with some of the other answers here. In my view, the most important dimension of the situation is not your friend's potential loss but the potential losses of the people he may convince by using his position as youth group leader, etc., to draw more them into the scam. Exactly how to handle this depends on many factors that aren't mentioned in your question (and probably rightly so, as this aspect of the situation moves beyond personal finance). For instance, if your friend is a "pillar of the community" who is widely trusted, and you are not, there may be little you can do, since people will believe him and not you. If you have some influence over the groups he is trying to recruit, you can attempt to provide a counterweight to his recruitment activities. Again, how to do this depends on other factors, such as how he is recruiting them. If he is just privately contacting individuals and inviting them to these meetings, you may have to just keep your eyes peeled for anyone who seems tempted and try to dissuade them before they suffer the "brainwashing". If he actually tries to do some sort of public recruitment (e.g., holding a meeting himself), you could try to inject doubt by, e.g., attending and asking probing questions to expose the dangers. If you think the danger is widespread, you could consider taking some more public action, like writing a column in a local paper about this organization. Of course, another major factor is how much you think people stand to lose by this. However, in your question you indicated that your friend has invested "multiple month or years of income". If he intends to pressure others to invest similar amounts, this sounds to me like enough danger to warrant some preventive action. Few people can afford to lose months or years of income, and sadly those most vulnerable to a scammer's siren song are often those who can least afford it. It doesn't sound like a situation where you'd have to devote your life to the cause of stopping it, but if I knew that dozens of people in my community stood to lose years of income, I'd want to make at least a small effort to stop them, rather than just keep my mouth shut. In doing this, you may lose your friendship. However, you stated that your goal is to resolve the situation in a way that is "best with lowest loss of money for everybody". If you really take this utilitarian view, it is likely that you may have to give up on the friendship to prevent other people from losing more money. |
That “write your own mortgage” thing; how to learn about it | It sounds like you are describing "seller-financed" mortgages (also sometimes called "self-financed", where "self" is the seller). In essence the buyer and seller enter into a legal contract (a promissory note) that specifies the payment schedule, interest rate, etc. The nature of the agreement is similar to the kind of mortgage agreement you'd get from the bank, but no bank is involved; it's just an agreeement directly between the buyer and seller. If you search for "seller-financed mortgage" or "self-financed mortgage" you can find a good deal more info about this kind of arrangement. Here is a useful article from Investopedia, here is one from Forbes, and here is one from Nolo. Broadly speaking, the advantages and disadvantages of seller financing are two sides of the same coin: by doing the agreement yourself without bank involvement, you can cut out procedural red tape, delays, and requirements that a bank might insist on --- but in so doing you may expose yourself to risks that those procedures are designed to shield you from. Most obviously, as the seller, you receive only the down payment up front (not the entire purchase price, as you would if the buyer got a bank loan), and if the buyer doesn't follow through on the agreement, you're on your own as far as starting foreclosure, etc. You can read up on some of the linked pages for more details about the pros and cons. In general, as those pages note, seller-financed mortgages are relatively rare. A home is a big purchase, and if you don't know what you're doing it's easy to screw up in a way that could cost you a large amount of money if things go wrong. |
Estate taxes and the top 1 percent by net worth | There are two main reasons for the difference between these two numbers: While there are a few people that are wildly wealthy, most of the people with more than 10 million have between 10-50 million dollars. These people shield most of their estate and in the end the tax only effects a small portion of even the wealthy. |
What effect would sovereign default of a European country have on personal debt or a mortgage? | This is a hard question to answer. Government debt and mortgages are loosely related. Banks typically use yields on government bonds to determine mortgage interest rates. The banks must be able to get higher rates from the mortgage otherwise they would buy government bonds. Your question mentions default so I'm assuming a country has reneged on its promise to pay either the principal or interest on government bonds. The main thing to consider is "Who does not get their money?". In other words, who does the government decide not to pay. This is the important part. The government will have some money so they could pay some bond holders. They must decide who to shaft. For example, let's look at who holds Greek government debt. Around 70% of Greek government debt is held outside Greece. See table below. The Greek government could decide to default only on the debt to foreign holders. In that case the banks in France and Switzerland would take the loss on their bonds. This could cause severe problems in France and Switzerland depending on the percentage of Greek bonds that make up the banks' assets. Greek banks would still face losses, however, since the price of their Greek bond holdings would drop sharply when the government defaults. Interestingly, the losses for the Greek banks may be smaller than the losses faced by the French and Swiss banks. This is usually the favored option chosen by government since the French and Swiss don't vote in Greece. Yields on Greek government bonds would rise dramatically. If your Greek mortgage is an adjustable rate mortgage then you could see some big adjustments upward. If you live in France or Switzerland then the bank that owns your mortgage may go under if Greece defaults. During liquidation the bank will sell their assets which includes mortgages and you will probably not notice any difference in your mortgage. As I stated earlier: this is a hard question to answer since the two financial instruments involved (bonds and mortgages) are similar but may or may not be related. |
Optimal number of credit cards for a given length of credit history | I have found that between the Discover card and a Visa/Master Card a person has everything covered. In my case the Discover card had the best deal (cash back) and the Visa/Master Card took care of those times a vendor didn't take Discover. One big Box store (Costco) did trip us up, so we did end up getting an American Express card. But Costco is dropping that requirement in 2016. One advantage of only having a few cards is that the increase in your total credit line will be split among fewer cards. In your question the highest max limit on one card is $2500, what will you do if you have to take a flight at the last minute and the Airline ticket is more than that? If you need a higher limit, ask for one of your existing cards to raise it; don't go out and get another card. If you see that one of the companies that you already have a card with has a better card, you can ask them to convert your account to that better card. Yes higher total limit does help your utilization ratio portion of the score. But there is some opinion that they also look at the utilization ratio per card. So hitting one card to nearly the max can hurt your score. Three caveats about the number of cards: |
Do Options take Dividend into account? | No can't make quick bucks. It depends very much on what the strike price was. Dividends which are below 10% of the market value of the underlying stock, would be deemed to be ordinary dividends and no adjustment in the Strike Price would be made for ordinary dividends. For extra-ordinary dividends, above 10% of the market value of the underlying security, the Strike Price would be adjusted. Refer more at NSE India Edit: The Nifty consists of 50 stocks. The largest one has weight of around 8%. So 10% on this will only translate to .8% on index. |
Is stock trading based more on luck than poker playing? | I'd say that it cannot be meaningfully calculated or measured because the two are just too different in every way. Poker Stock trading I guess the last point (that someone relying on luck is exploitable in poker but not in stock trading) could be interpreted as stock trading being based more on luck, while the second and third points indicated that poker has more true randomness and is thus based more on luck. Something both have in common is that people who have been losing money are often tempted to take stupid risks which lose them everything. |
5/1 ARM: Lifetime cap, First Adjustment Cap, Margin, and Annual Cap? | I hope this image is clear. A spreadsheet is how I look at these things. Unfortunately, you didn't offer the starting balance so I use $100K which makes it easy to scale. You build a simple spreadsheet and enter the "what if" scenario, this tells me that worse case, an increase of 1% on the rate each year results in a near 60% increase in payments over the 10 years. Of course, this isn't the end of the story, I'd first change the payments to reflect the 5% rate, and see how much that drives the balance down. This would reduce the principal enough that the increase would be much less. On $100K, you'd pay $536.82 based on a 5% rate, regardless of the required payment. At 7.75% the payment is $563.11, not even 5% higher. If you'd like a spreadsheet started for you, I'll put it someplace for you to grab it. |
What are the consequences of being classified as a day trader, in Australia? | In Australia the ATO can determine if you are considered a shareholder or a share trader. The ATO defines a shareholder as: A shareholder is a person who holds shares for the purpose of earning income from dividends and similar receipts. Whilst they define a share trader as: A share trader is a person who carries out business activities for the purpose of earning income from buying and selling shares. To find out the differences between them you can refer to the following link describing The difference between a share trader and a shareholder. The ATO also describes: To be classed as a share trader, you may be asked to provide evidence that demonstrates you are carrying on a business of share trading, for example: the purchase of shares on a regular basis through a regular or routine method a trading plan use of share trading techniques in managing your share acquisitions, such as decisions based on thorough analysis of relevant market information a contingency plan in the event of a major shift in the market. Losses incurred in the business of share trading are treated the same as any other losses from business. If your activities change from investor to trader, your investment changes from a CGT (capital gains tax) asset to trading stock. This can trigger CGT event for any investments you currently hold as they change from CGT assets to trading stock. Once you have changed over to a trader you will not be entitled to the 50% CGT discount for stocks held over 12 months. You will, however, be able to count any paper losses at the end of Financial Year to reduce your other income. |
What is considered a business expense on a business trip? | The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate |
Do banks give us interest even for the money that we only had briefly in our account? | As mentioned in other answers the interest you make is negligible and the calculations would depend on the bank. In saying that the general trend is calculate daily, pay monthly. A typical scenario would be that every night at midnight the interest for your account at that point in time is calculated. This occurs every midnight and at the end of the month the sum of those calculations will be added to your account. You could have had several significant transactions pass through your account in one day although if the interest is calculated at a specific point in time some transactions may not contribute to any interest. These calculations are worth thinking about, even in circumstances of negligible returns, as it could assist when considering combining credit cards with home loan offset accounts so it is not a complete waste of time to understand how interest is calculated. The more you know ;) |
Offered a job: Should I go as consultant / independent contractor, or employee? | I think it really depends on what work/lifestyle you are looking for. I'm sure your more than capable of going down either route, but you should weigh up the pros and cons of each A consultant would be great, you'd be your own boss and you have overall say on how your business/career plans out, but be prepared to put in a hell of a lot of work to get it off the ground. Long hours, little time for social/family etc. But in the long run it'll pay off Employee, no worries about running your company, just turn up and perform your duties. You'll get the whole benefit package: healthcare/pension etc. You can probably go on expense paid training courses etc It depends, do you want to just be an employee working "for the man" or do you want to be "the man"? I wish you luck in whatever you do! :D |
What is a good way to save money on car expenses? | Keep up on routine maintenance. That's the best way to prolong the life of your car, and it'll save you money in the long run because you won't have to replace your car as often. Accelerate gently. The harder you push the gas pedal, the more gas you use. Coast to a stop rather than using your brakes. If you can avoid stopping by slowing down well before a red light so that by the time you actually get to the light it is green again, do so. Avoid high-speed driving. At highway speeds, wind resistance plays a big part in how much gas your car uses. If you can plan your trips to take slower routes, do so. Don't be the guy driving 55 in the left lane on the highway, though. Avoid stop-and-go traffic. Keeping to a constant speed is the most efficient. Plan your trips to avoid areas with lots of traffic, lots of curb-cuts and intersections, etc. Leave lots of space in front of you so you have time to anticipate other drivers intentions and slow down rather than having to slam on your brakes at the last second. Avoid short trips. Cars work best when they can get all the way up to operating temperature, and stay there for a while. If you're just going two miles, ride your bike. Live close to work and a grocery store, so you can walk or ride your bike rather than driving. Use your car for road trips and your quarterly trips to CostCo to restock the larder. If you can get away with not owning a car, sell it. Ride your bike, use public transit, or walk. If you can share a car with a significant other and only one of you has a long car commute, there's no sense in you both owning a car. |
Is there a way to monitor when executives or leaders in a company sell off large holdings? | Exec Insiders have to file with the SEC and some sites like secform4.com track it. But many insiders have selling programs where the sell the same amount every month or quarter so you would have to do your homework to determine if there are real signals in the activity. |
Would it ever be a bad idea to convert a traditional IRA to a Roth IRA with the following assumptions? | To answer your question point by point - I'd focus on the last point. The back of my business card - Let's focus on Single. The standard deduction and exemption add to over $10K. I look at this as "I can have $250K in my IRA, and my $10K (4%) annual withdrawal will be tax free. It takes another $36,900 to fill the 10 and 15% brackets. $922K saved pretax to have that withdrawn each year, or $1.17M total. That said, I think that depositing to Roth in any year that one is in the 15% bracket or lower can make sense. I also like the Roth Roulette concept, if only for the fact that I am Google's first search result for that phrase. Roth Roulette is systematically converting and recharacterizing each year the portion of the converted assets that have fallen or not risen as far in relative terms. A quick example. You own 3 volatile stocks, and convert them to 3 Roth accounts. A year later, they are (a) down 20%, (b) up 10%, (c) up 50%. You recharacterize the first two, but keep the 3rd in the Roth. You have a tax bill on say $10K, but have $15K in that Roth. |
How does a bank make money on an interest free secured loan? | Other answers didn't seem to cover it, but most "0%" bank loans (often offered to credit card holders in the form of balance transfer checks), aside from less-obvious fees like already-mentioned late fees, also charge an actual loan fee, typically 2-3% (or a minimum floor amount) - that was the deal with every single transfer 0% offer I ever saw from a bank. So, effectively, even if you pay off the loan perfectly, on time, and within 0% period, you STILL got a 3% loan and not 0% (assuming 0% period lasts 12 months which is often the case). |
Should I invest in real estate to rent, real estate to live in, or just stocks and bonds to earn 10-15%? | To be completely honest, I think that a target of 10-15% is very high and if there were an easy way to attain it, everyone would do it. If you want to have such a high return, you'll always have the risk of losing the same amount of money. Option 1 I personally think that you can make the highest return if you invest in real estate, and actively manage your property(s). If you do this well with short term rental and/or Airbnb I think you can make healthy returns BUT it will cost a lot of time and effort which may diminish its appeal. Think about talking to your estate agent to find renters, or always ensuring your AirBnB place is in good nick so you get a high rating and keep getting good customers. If you're looking for "passive" income, I don't think this is a good choice. Also make sure you take note of karancan's point of costs. No matter what you plan for, your costs will always be higher than you think. Think about water damage, a tenant that breaks things/doesn't take care of stuff etc. Option 2 I think taking a loan is unnecessarily risky if you're in good financial shape (as it seems), unless you're gonna buy a house with a mortgage and live in it. Option 3 I think your best option is to buy bonds and shares. You can follow karancan's 100 minus your age rule, which seems very reasonable (personally I invest all my money in shares because that's how my father brought me up, but it's really a matter of taste. Both can be risky though bonds are usually safer). I think I should note that you cannot expect a return of 10% or more because, as everyone always says, if there were a way to guarantee it, everyone would do it. You say you don't have any idea how this works so I'd go to my bank and ask them. You probably have access to private banking so that should mean someone will be able to sit you down and talk you through. Also look at other banks that have better rates and/or pretend you're leaving your bank to negotiate a better deal. If I were you I'd invest in blue chips (big international companies listed on the main indeces (DAX, FTSE 100, Dow Jones)), or (passively managed) mutual funds/ETFs that track these indeces. Just remember to diversify by country and industry a bit. Note: i would not buy the vehicles/plans that my bank (no matter what they promise, and they promise a lot) suggest because if you do that then the bank always takes a cut off your money. TlDr, dont expect to make 10-15% on a passive investment and do what a lot of others do: shares and bonds. Also make sure you get a lot of peoples opinions :) |
Buying a multi-family home to rent part and live in the rest | You are a "strategic" investor, which is to say that you are in the best position to evaluate the deal because you already live there. Others don't have this advantage going in, which is why they might not be inclined to do what you're doing. Your biggest advantage is that you know at least one tenant. In essence, you are your own "tenant" for the top floor You also presumably have a pretty good idea of the neighborhood. These are arguments for owning your own home, although it does get a bit trickier with a second tenant, whom you may not know. Do check credit and references, etc. You might ask the landlord why he wants to sell. Presumably it's because he wants to retire or move, and not a problem with the property. But it does no harm to ask. |
Getting financial advice: Accountant vs. Investment Adviser vs. Internet/self-taught? | Do I need an Investment Adviser? No, but you may want to explore the idea of having one. Is he going to tell me anything that my accountant can't? Probably. How much expertise are you expecting from your accountant here? Do you think your accountant knows everything within the realms of money from taxes, insurance products, investments and all your choices and what would work or wouldn't? Seems like it could be a tall order to my mind. My accountant did say to come to him for advice on investment/business issues. So, he is willing, but is he able? Not asking about his competence, but rather "is there something that only an Investment Adviser can provide, by law, that an accountant can't"? Not that I know though don't forget how much expertise are you expecting here from one person. Is this person intended to answer all your money questions? But isn't that something that my accountant could/should do? Perhaps though how well are you expecting one person to be aware of so much stuff? I want you to know all the tax law so I can minimize taxes, maximize my investment returns, cover me with adequate insurance, and protect my savings seems like a bit much to put on one entity. Do I need either of them? Won't the Internet and sites like this one suffice? Need no. However, how much time are you prepared to spend learning the basics of strategies that work for you? How much money are you prepared to put into things to learn what works and doesn't? While it is your decision, consider how to what extent do you diagnose your medical issues through the internet versus going to see a doctor? Be careful of how much of a do it yourself approach you want to go here and recognize that there are multiple approaches that may work. The question is which trade-offs are OK for you. |
Assessed value of my house | You said the tax assessor gave you an appraised value, but I think you mean assessed value. This article YOUR HOME; Market vs. Appraisal: What's the Real Value? explains the differences pretty well. |
What are some time tested passive income streams? | Last year was a great opportunity for dividend stocks and MLPs. I have a few which are earning 6-9% of my investment basis cost. Municipal bonds are a good value now. If you have the connections, passive investments in convenience franchises or other commercial property are a good income stream. A Dunkin Donuts used to be an amazing money printing machine. |
US tax for a resident NRI | Please declare everything you earn in India as well as the total amount of assets (it's called FBAR). The penalties for not declaring is jail time no matter how small the amount (and lots of ordinary people every 2-3 years are regularly sent to jail for not declaring such income). It's taken very seriously by the IRS - and any Indian bank who has an office in the US or does business here, can be asked by IRS to provide any bank account details for you. You will get deductions for taxes already paid to a foreign country due to double taxation, so there won't be any additional taxes because income taxes in US are on par or even lower than that in India. Using tricks (like transferring ownership to your brother) may not be worth it. Note: you pay taxes only when you realize gains anyway - both in India or here, so why do you want to take such hassles. If you transfer to your brother, it will be taxed only until you hold them. Make sure you have exact dates of gains between the date you came to US and the date you "gifted" to your brother. As long as you clearly document that the stocks transferred to your brother was a gift and you have no more claims on them, it should be ok, but best to consult a CPA in the US. If you have claims on them, example agreement that you will repurchase them, then you will still continue to pay taxes. If you sell your real estate investments in India, you have to pay tax on the gains in the US (and you need proof of the original buying cost and your sale). If you have paid taxes on the real estate gains in India, then you can get deduction due to double tax avoidance treaty. No issues in bringing over the capital from India to US. |
Why aren't bond mutual funds seeing huge selloffs now? | The Fed sets the overnight borrowing costs by setting its overnight target rate. The markets determine the rates at which the treasury can borrow through the issuance of bonds. The Fed's actions will certainly influence the price of very short term bonds, but the Fed's influence on anything other than very short term bonds in the current environment is very muted. Currently, the most influential factor keeping bond prices high and yields low is the high demand for US treasuries coming from overseas governments and institutions. This is being caused by two factors : sluggish growth in overseas economies and the ongoing strength of the US dollar. With many European government bonds offering negative redemption yields, income investors see US yields as relatively attractive. Those non-US economies which do not have negative bond yields either have near zero yields or large currency risks or both. Political issues such as the survival of the Euro also weigh heavily on market perceptions of the current attractiveness of the US dollar. Italian banks may be about to deliver a shock to the Eurozone, and the Spanish and French banks may not be far behind. Another factor is the continued threat of deflation. Growth is slowing around the world which negatively effects demand. Commodity prices remain depressed. Low growth and recession outside of the US translate into a prolonged period of near zero interest rates elsewhere together with renewed QE programmes in Europe, Japan, and possibly elsewhere. This makes the US look relatively attractive and so there is huge demand for US dollars and bonds. Any significant move in US interest rates risks driving to dollar ever higher which would be very negative for the future earning of US companies which rely on exports and foreign income. All of this makes the market believe that the Fed's hands are tied and low bond yields are here for the foreseeable future. Of course, even in the US growth is relatively slow and vulnerable to a loss of steam following a move in interest rates. |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | The rent payment is in principle taxable. However, you should be able to take advantage of the "rent a room" scheme, and the proposed rent falls well under the £7,500/year tax threshold for that. So no tax will be actually payable and you don't have to formally declare it as long as you stay below that threshold. You should also be fairly well legally protected in case you do split up in future and you want to remove her. As you would be living there too, she would just be a lodger, not a tenant (technically, an "excluded occupier"). If you did want her to leave you would only need to give reasonable notice and wouldn't need a formal court order if you needed to force her to go. As JBentley points out, there have been court cases where domestic partners contributing to household expenses while the other partner paid the mortgage have later been able to claim that this implied joint ownership. This was on the basis of a "constructive trust" being implicitly setup by the way they arranged their finances. In your case, if there's a clear intention, formalised in writing, for the money to be treated as rent rather than a contribution towards purchasing the property, I think it should make it very hard to claim the contrary later. I would also suggest you be clear about whether the rent includes a share of the utility bills, and that things like groceries would be handled separately and split 50:50 or whatever. As pointed out in a comment, there are template agreements for lodgers you could use a starting point (e.g. this one), but it's likely you'd need to customise it to your circumstances. Another point made in another answer is that there's potential upcoming legislation to give some rights to cohabiting partners. In the current draft, those would kick in after three years or having children. If the bill does come into effect, you'd also be able to sign an opt out, but only after getting legal advice, and it would still be possible (though presumably hard) to persuade a court to overturn an opt out. Overall that does create a small risk to you, but not one that comes directly from your girlfriend paying rent. It's likely that if you are both on an equal financial footing and had always kept your finances separate, that there wouldn't be any award made anyway. And you can't run your entire life on hypothetical risks. |
How to decide on split between large/mid/small cap on 401(k) and how often rebalance | There many asset allocation strategies to chose from that beat lifestyle funds. For example: Relative Strength Asset Allocation keeps your money in Stocks when stocks perform well, bonds when they outperform stocks, and cash when both bonds and stocks are under-performing. The re-allocation happens on a monthly basis. |
How can I avoid international wire fees or currency transfer fees? | Several possibilities come to mind: Several online currency-exchange brokers (such as xe.com and HiFx) offer very good exchange rates and no wire transfer fees (beyond what your own bank might charge you). Get French and American accounts at banks that are part of the Global ATM alliance: BNP Paribas in France and Bank of America in the USA. This will eliminate the ATM fee. Get an account at a bank that has branches in both countries. I've used HSBC for this purpose. |
Is a fixed-price natural gas or electricity contract likely to save money? | The answer to this question will vary considerably by state and how utilities are regulated in your area. In New York, ESCOs (Energy Supply Companies) are almost always a ripoff for consumers versus the old-style regulated utility (in NY the utility supply markups are tightly regulated, but ESCOs are less regulated). You also need to really understand the marketplace rules for "locking in" a price. If you can lock in the July price for natural gas for a year, that rocks. There are other factors as well. But even then its a real bet, since weather and supply factors can have a dramatic effect on gas prices in the winter. IMO, the best bet is to run with the market rates and bank the efficiency improvements that you build into your home over time. Some utilities offer "budget plans" that smooth out your payments without interest -- I'd recommend that route if predictable bills are your goal. |
What should I do to pick the right consultant to open offshore bank account | It is unusual to need a consultant to open a bank account for you, and I would also be concerned that perhaps the consultant could take the money and do nothing, or continue to demand various sums of money for "expenses" like permits, licenses, identity check, etc. until you give up. Some of the more accepted ways to open a bank account are: A: Call up an established bank and follow their instructions to open a personal account . Make sure you are calling on a real bank, one that has been around a while. Hints: has permanent locations, in the local phone book, and has shares traded on a national stock exchange. Call the bank directly, don't use a number given to you by a 3rd party consultant, as it may be a trick... Discuss on the phone and find out if you can open an account by mail or if you need to visit in person. B: Create a company or branch office in the foreign country, assuming this is for business or investing. and open an account by appointing someone (like a lawyer or accountant or similar professional) in the foreign country to represent the company to open an account in person. If you are a US citizen, you will want to ask your CPA/accountant/tax lawyer about the TD F 90-22.1 Foreign Account Bank Report form, and the FATCA Foreign Account Tax Compliance Act. There can be very large fines for not making the required reports. The requirements to open a bank account have become more strict in many countries, so don't be surprised if they will not open an account for a foreigner with no local address, if that is your situation. |
What is the dividend tax rate for UK stock | FYI, I am assuming you are an individual investor.. The rates on the website may change, if the government decides so. Anyway it is a UK government website, so it would reflect the changes immediately. |
Has anyone compared an in-person Tax Advisor to software like Turbo Tax? | so far the only thing that I can think of that would make me want to go with H&R Block is the guarantee that they offer ( for a fee ) that says they will help you if you are ever audited for a tax return that you filed through them, but I think that is given for both the software and the in person tax preparation. so I guess if you like to ask lots of questions and get the answers nearly immediately I would go with an in person tax preparation person, if they can't answer all your questions then that is something else to think about all together. |
Why is everyone saying how desperately we need to save money “in this economy”? | As you point out in your question your risk level is personal. If you really believe your job is stable there is no more risk. However the overall evidence is that most jobs are less stable, and if you do lose your job you're likely going to be out of work for a while. One thing to consider though is that if you have planned on emergency credit in the past, that option is not really viable anymore. |
Why so much noise about USA's credit rating being lowered? | Because the USA is the world's biggest economy - everybody in the world works with the USA (even if the american companies are not direct suppliers, they are surely somewhere in the supply chain). If USA credit rating is lower, that means american companies will find it harder to get loans to finance their business (i.e. the price of capital will be higher), and this will consequently lead to higher prices for partners of american companies, etc. This will certainly lead to slowdown of global economy. Plus, the lower credit rating also means that the USA govt. is less likely to pay off the debts (Chinese already stated they will diversify their bonds portfolio -i.e. they will start selling out american govt. bonds). This will lead to cuts in public sector in USA, less spending by the consumers, also probably less import from abroad and less travel which will affect - you get it - the "RoW". It's not by chance we have a saying in Europe, when USA sneezes, the rest of the world catches a flu! |
What are the financial advantages of living in Switzerland? | The lake is beautiful. The Swiss people are really good educated The companies want to be a part of these great reputation. We have low taxes We are political stable Our currency is stable We are company-friendly |
Consequences of buying/selling a large number of shares for a low volume stock? | It's illegal and you can go to jail because it exploits the small companies and their investors who believe in the company. |
Is buying a lottery ticket considered an investment? | Although this has been touched upon in comments, I think the following line from the currently accepted answer shows the biggest issue: There is a clear difference between investing and gambling. The reality is that the difference isn't that clear at all. Tens of comments have been written arguing in both directions and looking around the internet entire essays have been written arguing both positions. The underlying emotion that seems to shape this discussion primarily is whether investing (especially in the stock market) is a form of gambling. People who do invest in this way tend to get relatively emotional whenever someone argues that this is a form of gambling, as gambling is considered a negative thing. The simple reality of human communication is that words can be ambiguous, and the way investors will use the words 'investments' and 'gambles' will differ from the way it is used by gamblers, and once again different from the way it's commonly used. What I definitely think is made clear by all the different discussions however is that there is no single distinctive trait that allows us to differentiate investing and gambling. The result of this is that when you take dictionary definitions for both terms you will likely end up including lottery tickets as a valid form of investment. That still however leaves us with a situation where we have two terms - with a strong overlap - which have a distinctive meaning in communication and the original question whether buying lottery tickets is an investment. Over on investorguide.com there is an absolutely amazing strongly recommended essay which explores countless of different traits in search of a difference between investing and gambling, and they came up with the following two definitions: Investing: "Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): sufficient research has been conducted; the odds are favorable; the behavior is risk-averse; a systematic approach is being taken; emotions such as greed and fear play no role; the activity is ongoing and done as part of a long-term plan; the activity is not motivated solely by entertainment or compulsion; ownership of something tangible is involved; a net positive economic effect results." Gambling: "Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): little or no research has been conducted; the odds are unfavorable; the behavior is risk-seeking; an unsystematic approach is being taken; emotions such as greed and fear play a role; the activity is a discrete event or series of discrete events not done as part of a long-term plan; the activity is significantly motivated by entertainment or compulsion; ownership of something tangible is not involved; no net economic effect results." The very interesting thing about those definitions is that they capture very well the way those terms are used by most people, and they even acknowledge that a lot of 'investors' are gambling, and that a few gamblers are 'investing' (read the essay for more on that). And this fits well with the way those two concepts are understood by the public. So in those definitions normally buying a lottery ticket would indeed not be an investment, but if we take for example Vadim's operation example If you have $1000 and need $2000 by next week or else you can't have an operation and you will die (and you can't find anyone to give you a loan). Your optimal strategy is to gamble your $1000, at the best odds you can get, with a possible outcome of $2000. So even if you only have a 1/3 chance of winning and getting that operation, it's still the right bet if you can't find a better one. this can suddenly change the perception and turn 'gambling' into 'high-risk investing'. |
Personal Tax Deduction for written work to a recognized 501c3 | If it's work you'd be producing specifically for this organization, that would not be deductable. Per Publication 526, Charitable Deductions, "You can't deduct the value of your time or services, including: … The value of income lost while you work as an unpaid volunteer for a qualified organization." On the other hand, if you were say an author of a published book or something (not specifically written for this organization), you could donate a copy of the book and probably deduct its fair market value (or perhaps only your basis, if it's your business's inventory). |
Should I pay more than 20% down on a home? | Leverage increase returns, but also risks, ie, the least you can pay, the greater the opportunity to profit, but also the greater the chance you will be underwater. Leverage is given by the value of your asset (the house) over the equity you put down. So, for example, if the house is worth 100k and you put down 20k, then the leverage is 5 (another way to look at it is to see that the leverage is the inverse of the margin - or percentage down payment - so 1/0.20 = 5). The return on your investment will be magnified by the amount of your leverage. Suppose the value of your house goes up by 10%. Had you paid your house in full, your return would be 10%, or 10k/100k. However, if you had borrowed 80 dollars and your leverage was 5, as above, a 10% increase in the value of your house means you made a profit of 10k on a 20k investment, a return of 50%, or 10k/20k*100. As I said, your return was magnified by the amount of your leverage, that is, 10% return on the asset times your leverage of 5 = 50%. This is because all the profit of the house price appreciation goes to you, as the value of your debt does not depend on the value of the house. What you borrowed from the bank remains the same, regardless of whether the price of the house changed. The problem is that the amplification mechanism also works in reverse. If the price of the house falls by 10%, it means now you only have 10k equity. If the price falls enough your equity is wiped out and you are underwater, giving you an incentive to default on your loan. In summary, borrowing tends to be a really good deal: heads you win, tails the bank loses (or as happened in the US, the taxpayer loses). |
Does renting a room on AirBnB make all interest taxable? | What theyre fishing for is whether the money was earned in the U.S. It's essentially an interest shelter, and/or avoiding double taxation. They're saying if you keep income you make outside the US in a bank inside the US, the US thanks you for storing your foreign money here and doesn't tax the interest (but the nation where you earned that income might). There is no question that the AirBNB income is "connected with a US trade or business". So your next question is whether the fraction of interest earned from that income can be broken out, or whether IRS requires you to declare all the interest from that account. Honestly given the amount of tax at stake, it may not be worth your time researching. Now since you seem to be a resident nonresident alien, it seems apparent that whatever economic value you are creating to earn your salary, is being performed in the United States. If this is for an American company and wages paid in USD, no question, that's a US trade or business. But what if it's for a Swedish company running on Swedish servers, serving Swedes and paid in Kroner to a Swedish bank which you then transfer to your US bank? Does it matter if your boots are on sovereign US soil? This is a complex question, and some countries (UK) say "if your boots are in our nation, it is trade/income in our nation"... Others (CA) do not. This is probably a separate question to search or ask. To be clear, the fact that your days as a teacher or trainee do not count toward residency, is a separate question from whether your salary as same counts as US income. |
What is the US Fair Tax? | Its a new way of computing sales tax. Wikipedia has a nice article on this http://en.wikipedia.org/wiki/FairTax |
UK - How to receive payments in euros | See my comment below about the official exchange rate. There is no "official" exchange rate to apply as far as I'm aware. However the bank is already applying the same exchange rate you can find in the forex markets. They are simply applying a spread (meaning they will add some amount to the exchange rate whichever way you are exchanging currency). You will almost certainly not find a bank that doesn't apply a spread. Of course, their spread might be large, so that's why it is good to compare rates. By the way, 5 GBP/month seems reasonable for a foreign currency (or any) acct. The transaction fees might be cheaper in a different "package" so check. You should consider trying PayPal. Their spread is quite small - and publicly disclosed - and their per-transaction fees are very low. Of course, this is not a bank account. But you can easily connect it to your bank account and transfer the money between accounts quickly. They also offer free foreign currency accounts that you can basically open and close in a click. Transfers are instantaneous. I am based in Germany but I haven't had a problem with clients from various English-speaking countries using PayPal. They actually seem to prefer it in many instances. |
Are credit histories/scores international? | Credit history is local, so when you move to the US you start with the blank slate. Credit history length is a huge factor, so in the first year expect that nobody would trust you and you may be refused credit or asked for deposits. I was asked for deposits at cell phone company and refused for store cards couple of times. My advice - get a secured credit card (that means you put certain sum of money as a deposit in the bank and you get credit equal to that sum of money) and if you have something like a car loan that helps too (of course, you shouldn't buy a car just for that ;) but if you're buying anyway, just know it's not only hurting but also helping when you pay). Once you have a year or two of the history and you've kept with all the payments, you credit score would be OK and everybody would be happy to work with you. In 4-5 years you can have excellent credit record if you pay on time and don't do anything bad. If you are working it the US, a lot of help at first would be to take a letter from your company on an official letterhead saying that you are employed by this and that company and are getting salary of this and that. That can serve as an assurance for some merchants that otherwise would be reluctant to work with you because of the absence of credit history. If you have any assets overseas, especially if they are held in a branch of international bank in US dollars, that could help too. In general, don't count too much on credit for first 1-2 years (though you'd probably could get a car loan, for example, but rates would be exorbitant - easily 10 percentage points higher than with good credit), but it will get better soon. |
Investing Superannuation Australia | You can make a start to learn how to make better investing decisions by learning and understanding what your current super funds are invested in. Does the super fund give you choices of where you can invest your funds, and how often does it allow you to change your investment choices each year? If you are interested in one area of investing over others, eg property or shares, then you should learn more on this subject, as you can also start investing outside of superannuation. Your funds in superannuation are taxed less but you are unable to touch them for another 30 to 35 years. You also need to consider investing outside super to help meet your more medium term goals and grow your wealth outside of super as well. If you are interested in shares then I believe you should learn about both fundamental and technical analysis, they can help you to make wiser decisions about what to invest in and when to invest. Above is a chart of the ASX200 over the last 20 years until January 2015. It shows the Rate Of Change (ROC) indicator below the chart. This can be used to make medium to long term decisions in the stock market by investing when the ROC is above zero and getting out of the market when the ROC is below zero. Regarding your aggressiveness in your investments, most would say that yes because you are still young you should be aggressive because you have time on your side, so if there is a downturn in your investments then you still have plenty of time for them to recover. I have a different view, and I will use the stock market as an example. Refer back to the chart above, I would be more aggressive when the ROC is above zero and less aggressive when the ROC is below zero. How can you relate this to your super fund? If it does provide you to change your investment choices, then I would be invested in more aggressive investments like shares when the ROC crosses above zero, and then when the ROC moves below zero take a less aggressive approach by moving your investments in the super fund to a more balanced or capital guaranteed strategy where less of your funds are invested in shares and more are invested in bonds and cash. You can also have a similar approach with property. Learn about the property cycles (remember super funds usually invest in commercial and industrial property rather than houses, so you would need to learn about the commercial and industrial property cycles which would be different to the residential property cycle). Regarding your question about SMSFs, if you can increase your knowledge and skills in investing, then yes switching to a SMSF will give you more control and possibly better returns. However, I would avoid switching your funds to a SMSF right now. Two reasons, firstly you would want to increase your knowledge as mentioned above, and secondly you would want to have at least $300,000 in funds before switching to a SMSF or else the setup and compliance costs would be too high as a percentage of your funds at the moment ($70,000). You do have time on your side, so whilst you are increasing your funds you can use that time to educate yourself in your areas of interest. And remember a SMSF is not only an investment vehicle whilst you are building your funds during your working life, but it is also an investment vehicle when you are retired and it becomes totally tax free during this phase, where any investment returns are tax free and any income you take out is also tax free. |
Is it advisable to go for an auto loan if I can make the full payment for a new car? | Without knowing the terms of the company leased car, it's hard to know if that would be preferable to purchasing a car yourself. So I'll concentrate on the two purchase options - getting a loan or paying in full from savings. If the goal is simply to minimize the amount paid for this car, then paying the full cost up-front is best, because it avoids the financing and interest charges associated with a loan. However, the money you would pay for this car would come out of somewhere (your savings). If your savings were in an investment earning a risk-adjusted return rate of, say, 5% APY and the loan cost 1% APY, you'd have more money in the long run by keeping as much money in your savings as possible, and paying the loan as slowly as possible, because the return rate on your savings is higher. Those numbers are theoretical, of course. You have to make a decision based on your expectation of the performance of your investments, and on the cost of the loan. But depending on your risk tolerance and the loan terms available to you, a loan may well make sense. This is especially true when loans costs are subsidized by manufacturers, who often offer favorable financing on new cars to drive demand. But even bank loans on cars can be pretty inexpensive because the car is a form of collateral with predictable future value. And finally, you should consider tax treatment -- not usually a consideration in purchases of cars by consumers in the US, but can vary due to business use and certainly may be different in India. See also: How smart is it to really be 100% debt free? |
How can a 'saver' maintain or increase wealth in low interest rate economy? | Personally, I invest in mutual funds. Quite a bit in index funds, some in capital growth & international. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | Talk to your parents, and find out if you are reducing the debt or not. Find buyers, sell the place now and get out the deal. Of course you will have to wait to get a good price on it. Short term you haven't lost that much, but long term you will. Take your 25%, and use it as a down payment on a regular bank mortgage. Lesson learned move on. |
Does high frequency trading (HFT) punish long-term investment? | I disagree strongly with the other two answers posted thus far. HFT are not just liquidity providers (in fact that claim is completely bogus, considering liquidity evaporates whenever the market is falling). HFT are not just scalping for pennies, they are also trading based on trends and news releases. So you end up having imperfect algorithms, not humans, deciding the price of almost every security being traded. These algorithms data mine for news releases or they look for and make correlations, even when none exist. The result is that every asset traded using HFT is mispriced. This happens in a variety of ways. Algos will react to the same news event if it has multiple sources (Ive seen stocks soar when week old news was re-released), algos will react to fake news posted on Twitter, and algos will correlate S&P to other indexes such as VIX or currencies. About 2 years ago the S&P was strongly correlated with EURJPY. In other words, the American stock market was completely dependent on the exchange rate of two currencies on completely different continents. In other words, no one knows the true value of stocks anymore because the free market hasnt existed in over 5 years. |
Why does Yahoo miss some mutual fund dividends/capital gains? | This looks more like an aggregation problem. The Dividends and Capital Gains are on quite a few occassions not on same day and hence the way Yahoo is aggregating could be an issue. There is a seperate page with Dividends and capital gains are shown seperately, however as these funds have not given payouts every year, it seems there is some bug in aggregating this info at yahoo's end. For FBMPX http://uk.finance.yahoo.com/q/hp?s=FBMPX&b=2&a=00&c=1987&e=17&d=01&f=2014&g=v https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/316390681 http://uk.finance.yahoo.com/q/pr?s=FBMPX |
How are stock buybacks not considered insider trading? | Another way to look at this is that pure insider trading is an activity with the aim to use secret information to make personal profit or let others make personal profit at the expense of the company shareholders or investors. In buybacks, it is not company managers to get personal gain in this would-be "insider trading". The end-winners in this case are the shareholders. So there is nothing inherently bad in buying back stock. Moreover, it is a general practice to buy shares back (as opposed to paying dividends) when the company sees its shares being undervalued (of course, provided that it has the cash/borrowing ability to implement this), since it creates shareholders value, thereby maximising shareholder wealth, which is one of the primary tasks of the company managers. |
Advantage of Financial Times vs. free news sources for improving own knowledge of finance? | If you are interested in a career in algorithmic trading, I strongly encourage you to formally study math and computer science. Algorithmic trading firms have no need for employees with financial knowledge; if they did, they'd just be called "trading" firms. Rather, they need experts in machine learning, statistical modeling, and computer science in general. Of course there are other avenues of employment at an algorithmic trading firm, such as accounting, clearing, exchange relations, etc. If that's the sort of thing you're interested in, again you'll probably want a formal education in those areas as opposed to just reading about finance in the news. If you edit your question or add a comment below with information about your particular background, I could perhaps advise you in a bit more detail. ::edit:: Given your comment, I would say you have a fine academic background for the industry. When hiring mathematicians, firms care most about the ease with which you can explore and extract features from massive datasets (especially time series) regardless of what the dataset might represent. An intelligent firm will not care whether you arrive at their doorstep with zero finance knowledge; they will want to teach you everything from scratch anyway. Nonetheless, some domain knowledge could be helpful, but you're not going to get "more" of it from reading any mass market news source, whether you have to pay for it or not. That's because Some non-mass-market news sources in the industry are These are subscription-only and actually discuss real information that real professional investors care about. They are loaded with industry jargon, they're extremely opinionated, and (in my opinion) they're useless. I can't imagine trying to learn about the industry from them, but if you want to spend money for news in order to be exposed to the innards of the industry, then either of these is far better than the Financial Times. Despite requiring a subscription, the Financial Times still does not cover the technical details of professional trading. Instead of trying to learn from news, then, I would suggest some old favorites: and, above all else, Read everything in the navigation box on the right side under Financial Markets and Financial Instruments. |
Expense ratio of an ETF included in the price or calculated separately | The expense ratio reduces the return of the ETF; your scenario of paying 100.0015 is that of a load. Most (all?) ETFs can be bought without paying a load (sales charge as a percent of amount invested), and some ETFs can be bought without paying a brokerage fee (fixed or variable charge for a buy transaction just like buying any other stock through the brokerage) because the brokerage has waived it. Your broker might charge fees for both buying and selling shares in an ETF, but in any case, this is quite separate from the expense ratio. |
When writing a covered call, what's the difference between a “net debit” and a “net credit”? | When you buy a stock and sell a covered call, the call can't be valued higher than the stock, right? How can a call on a $10 stock sell for more than the stock? So, the initial position of a covered call will cost you something. The transaction is a debit to you. The net amount of the deal, usually prices as per stock/option single share. For the image showing net credit, it's as if you expect to get paid for you to take this deal. |
Is there a lower threshold for new EU VAT changes coming 1 Jan 2015 related to the sale of digital goods? | Been digging through all the EU VAT directives and have called HMRC as well.. There does not seem to be any lower threshhold for charging VAT into the EU. If you sell £10 of goods/services you have to charge VAT and file a VAT return. Your options are: 1) Register for MOSS and file a single VAT return in your home country for all countries. In the UK this means that you also have to be VAT registered and have to charge VAT locally as well - even if you are below the UK threshold. 2) Register and file a VAT return in every EU country you sell into. You also have to apply the correct VAT rate for each country (typically 15% to 27%), and you have to keep at least two pieces of evidence for the customer location. eg. billing address, IP address, etc. |
Official site to follow Warren Buffet's Berkshire Hathaway change in investment holdings? | Are you looking for this Warren Buffets Stock Portfolio? Or Berkshire Hathaway Portfolio WFC is near the bottom of the BH portfolio but it seems to be a rather large investment for both. |
Taxes for citizen of EU country #1 living in EU country #2 and working from home for non-EU country #3? | You will almost certainly be paying taxes in Czech Republic, short of being American of Eritrean, citizenship has little to no bearing on tax. If you are working from home, you will probably be a contractor. In Romania you would work through either an SRL or you would set up a PFA. Essentially a limited company or a sole trader. You will need to find the Czech equivalents. I would advise finding a small business accountant. They will be able to advise what is the most cost effective solution, in some countries (like my one) you can save considerable amounts of tax by working through a company. There is a link with some information. |
How do credit union loans and dividends vs interest work? | A credit Union makes loans exactly the same ways a bank does. A portion of the money deposited in checking, savings, money market, Certificate of Deposit, or IRA is then used to make loans for cars, boats, school, mortgages, 2nd mortgages, lines of credit... The government dictates the percentage of each type of deposit that must be held in reserve for non-loan transactions. The Credit Union members are the share holders of the "company". There are no investors in the "company" because the goal is not to make money. In general the entire package is better because there is no pressure to increase profits. Fees are generally lower because they are there to discourage bad behavior, not as a way to make a profit off of the bad behavior. Dividends/interest are treated the same way as bank interest. The IRS forms are the same, and it is reported the same way. Some of bizarre rules they have to follow: maximum number of transactions between accounts, membership rules, are there because banks want to make it harder to be a member of a credit union. |
How to allocate profit and loss in partnership where one partner's activities are profitable and the other's aren't? | You should have a partnership agreement of some sort. The reason partnership agreements exist is so nobody can change the game because of the outcome. I'd say the most typical partnership agreement is that everyone gets an equal cut, meaning that everyone also makes an equal contribution. If you have start up expenses of $10,000, you'd each contribute $5,000. Separately, you can determine ownership share by contribution amounts, maybe one of you contributed $2,000 and the other $8,000; this would be an 80/20 split. The performance of the operation doesn't have anything to do with determining how to divide the pie, your partnership agreement determines that. How much have you each contributed and what agreement did you make before you decided to be partners? If you have a poor performing business segment, then the partnership should get together and consider adjusting or stopping that line of business. But you don't change how the pie is divided because of it; unless your partnership agreement says you do. |
What is a good way to save money on car expenses? | Manage the fuel consumption price: check the pattern of fuel prices if you can for your area. Some areas have weekly changes which are somewhat predictable and some sites will even predict the minimum price for the next day. Some other areas will have a discount fuel day. Switch to diesel: fuel consumption by diesel engines are much better than standard combustion engines. Downside is not as many refueling stations. Switch to a hybrid: fuel consumption is better than comparable combustion engines alone but the downside is that the technology is new and still maturing. Check out this site for more information. |
What's the minimum revenue an LLC must make in Florida or NY states? | Depends on the State. In California, for example, you pay a franchise tax of $800 every year just for having LLC, and in addition to that - income tax on gross revenue. But in other States (like Wyoming, for example) there's no taxes at all, only registration fees (which may still amount to ~$100-300 a year). IRS doesn't care about LLC's at all (unless you chose to treat is as a corporation). You need to understand that in the US we have the "Federal Government" (IRS is part of that) and the "State Government" that deals with business entities, in each of the 50 States. Since you're talking about Italy, and not EU, you should similarly be talking about the relevant State, and not US. |
Are Exchange-Traded Funds (ETFs) less safe than regular mutual funds? | If anything, the price of an ETF is more tightly coupled to the underlying holdings or assets than a mutual fund, because of the independent creation/destruction mechanism. With a mutual fund, the price is generally set once at the end of each day, and the mutual fund manager has to deal with investments and redemptions at that price. By the time they get to buying or selling the underlying assets, the market may have moved or they may even move the market with those transactions. With an ETF, investment and redemption is handled by independent "authorized participants". They can create new units of the ETF by buying up the underlying assets and delivering them to the ETF manager, and vice versa they can cancel units by requesting the underlying assets from the ETF manager. ETFs trade intraday (i.e. at any time during trading hours) and any time the price diverges too far from the underlying assets, one of the authorized participants has an incentive to make a small profit by creating or destroying units of the ETF, also intraday. |
A merchant requests that checks be made out to “Cash”. Should I be suspicious? | To put a positive spin on the whole thing, maybe it's a small family shop, and having the check made out to "cash" means that your barber can hand it to someone else without the need to countersign. Or maybe his last name is "Cash" - there was a pretty famous singer who fit that description. Either way, it's not your place to nanny his finances. |
Understanding Put Options | Options, both puts and calls, are typically written/sold at different strike prices. For example, even though the stock of XYZ is currently trading at $12.50, there could be put options for prices ranging from $0.50 to $30.00, just as an example. There are several factors that go into determining the strike prices at which people are willing to write options. The writer/seller of an option is the person on the other side of the trade that has the opposite opinion of you. If you are interested in purchasing a put on a stock to hedge your downside, that means the writer/seller of the put is betting that you are wrong and that the stock price will rise instead. |
Company A is buying company B, what happens to the stock? | I think the correct statement is that Expedia wants to buy Orbitz for $12/share. The market price is $11, which means there is somebody willing to sell for that price. But you can't say that a stock price of $11 means that everybody is willing to sell for that price. And Expedia is unlikely to bid $12/share for just 40% of Orbitz shares; they'll want at least a controlling majority. |
Cons of withdrawing money from an Roth IRA account? | One "con" I have not yet seen mentioned: retirement accounts are generally protected from creditors in a bankruptcy. There are limits and exceptions, Roth has a 1.2 million dollar limit and can be split by a divorce QDRO for instance. Link Since it seems you have no income this year, you may may be raiding your IRA for living expenses. If there is a chance you may declare bankruptcy in the next year or so, consider doing that first and raid the IRA for seed money after. |
What is the best use of “spare” money? | Congratulations! You're making enough money to invest. There are two easy places to start: I recommend against savings accounts because they will quite safely lose your money: the inflation rate is usually higher than the interest rate on a savings account. You may have twice as much money after 50 years, but if everything costs four times as much, then you've lost buying power. If, in the course of learning about investing, you'd like to try buying individual stocks, do it only with money you wouldn't mind losing. Index funds will go down slightly if one of the companies in that index fails entirely, but the stock of a failed company is worthless. |
Does an industry 'standard' have any affect on when a stock might split? | You ask if Tesla being a car company should feel a pressure to split their stock because their share price is much higher than the other car companies. But is Tesla a car company? It was founded by Elon Musk who founded PayPal and SpaceX. He sees him self as the next generation of entrepreneurs that came after Jobs and Gates. So he compares Tesla ($142) companies to Google ($856), Amazon ($284) and eBay ($52). But even if you see Tesla as a car company, Musk sees it more like Audi ($828) or BMW ($100) then he does Ford ($16.30) just because the base price of their models ($80,000+) is much greater than Ford or GM. The theory is that keeping the share price in a lower range helps investors. But since 40% of the company is owned by mutual funds is that really a concern? Therefore most small investors get the company though a mutual fund. |
My investment account is increasingly and significantly underperforming vs. the S&P 500. What should I do? | Typically you diversify a portfolio to reduce risk. The S&P 500 is a collection of large-cap stocks; a diversified portfolio today probably contains a mix of large cap, small cap, bonds, international equity and cash. Right now, if you have a bond component, that part of your portfolio isn't performing as well. The idea of diversification is that you "smooth out" the ups and downs of the market and come out ahead in most situations. If you don't have a bond or cash component in your portfolio, you may have picked (or had someone pick for you) lousy funds. Without more detail, that's about all that can be said. EDIT: You provided more detail, so I want to add a little to my answer. Basically, you're in a fund that has high fees (1.58% annually) and performance that trails the mid-cap index. The S&P 500 is a large-cap index (large cap == large company), so a direct comparison is not necessarily meaningful. Since you seem to be new at this, I'd recommend starting out with the Vanguard Total Stock Market Index Fund (VTSMX) or ETF (VTI). This is a nice option because it represents the entire stock market and is cheap... it's a good way to get started without knowing alot. If your broker charges a transaction fee to purchase Vanguard funds and you don't want to change brokers or pay ETF commissions, look for or ask about transaction-fee free "broad market" indexes. The expense ratio should be below 0.50% per year and optimally under 0.20%. If you're not having luck finding investment options, swtich to a discount broker like TD Ameritrade, Schwab, ScottTrade or Fidelity (in no particular order) |
What's behind the long secular bull market in U.S. Treasuries? | In a secular bull market, strong investor sentiment drives prices higher, as participants, over time, are net buyers. Secular markets are typically driven by large-scale national and worldwide events... demographic/ population shifts, governmental policies... bear market periods occur within the longer interval, but do not reverse the trend. There are still many reasons to buy the long bond, despite the lack of yield (nearly flat term structure of interest rates). Despite the recent credit ratings agency downgrades of U.S. sovereign risk, the T-bond offers greater relative security than many alternatives. If Germany were NOT part of the EU, its government bonds would be issued by the Bundesbank, denominated in Deutsche Marks. German government bonds would probably be a better choice than the U.S. Treasury's 30-year bond. Long-term maturity U.S. Treasuries are in demand by investment and portfolio managers because: |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | Your thinking is unfortunately incorrect; an amortising loan (as opposed to interest only loans) pay down, or amortise, the principal with each payment. This means that the amount that is owed at prepayment will always be less than the total borrowed, and is also why some providers make a charge for prepayment. The "fairness" arguments that you make predicated on that misunderstanding are, therefore, incorrect. |
Why don't banks allow more control over credit/debit card charges? | quid has expressed some of the disadvantages with this approach, but there is another. Vendors will not want to give you any goods you buy with your credit card until they are sure they will get the money. With your suggested approach buying something with a credit card now looks like: No vendor is going to stand for this for even moderate sized transactions, so in reality they will just decline your card if you have this facility enabled. |
Possible to use balance transfers to avoid interest with major credit cards? | I have done this for years and have been quite successful at it. Two reason I even need to do this - desire to pay for engagement ring and pay for 150 person wedding without using my nest-egg/savings. You need to keep a document that details when the free APRs run out, and you need to setup automatic payments of the minimum balance from your checking account so you ensure you do not miss a payment. You need to understand when you are going to need to make big purchases of homes/apartments/cars so that you can ensure you aren't doing this right before your credit score is being checked (Need to leave 12 months without opening new accounts before doing this). I have been able to finance about $60,000 worth of unsecured debt paying between 3-5% interest per year. We have an unsecured credit line with Citibank that charges 14% and is capped at $10,000, and Discover Personal Loans charge around 14% as well (in pre-paid interest!). I would say, all things considering, that this is a great deal if you don't have a secured line of credit with a low interest rate. It is something, however, that if you aren't diligent can get away from you. From my experience I would rather pay a small amount of interest while allowing my savings and retirement to grow interest (hopefully greater than 3-5%) than pay the huge expense and start from zero. But if you miss a single payment on a 0 APR balance transfer they charge you all back interest concessions plus charge you a penalty rate. Like many of the other posts, you need discipline to make this work. |
Home Valuation in a Dodgy neighborhood | I wouldn't personally spend any money on an appraisal. Spend some time yourself looking at Zillow.com and maybe Realtor.com and other sites to review recent sales in your specific area. Not the houses a mile away. Try to find comparables to yours. The key factor is dollars per square foot. See if the trend over the last couple of years is upwards or downwards in dollars per square foot of living area. If it's downwards, I wouldn't invest for sure. |
GBP savings, what to do with them if leaving the U.K. in about 2 years time? | In general, to someone in a similar circumstance I might suggest that the lowest-risk option is to immediately convert your excess currency into the currency you will be spending. Note that 'risk' here refers only to the variance in possible outcomes. By converting to EUR now (assuming you are moving to an EU country using the EUR), you eliminate the chance that the GBP will weaken. But you also eliminate the chance that the GBP will strengthen. Thus, you have reduced the variance in possible outcomes so that you have a 'known' amount of EUR. To put money in a different currency than what you will be using is a form of investing, and it is one that can be considered high risk. Invest in a UK company while you plan on staying in the UK, and you take on the risk of stock ownership only. But invest in a German company while you plan on staying in the UK, you take on the risk of stock ownership + the risk of currency volatility. If you are prepared for this type of risk and understand it, you may want to take on this type of risk - but you really must understand what you're getting into before you do this. For most people, I think it's fair to say that fx investing is more accurately called gambling [See more comments on the risk of fx trading here: https://money.stackexchange.com/a/76482/44232]. However, this risk reduction only truly applies if you are certain that you will be moving to an EUR country. If you invest in EUR but then move to the US, you have not 'solved' your currency volatility problem, you have simply replaced your GBP risk with EUR risk. If you had your plane ticket in hand and nothing could stop you, then you know what your currency needs will be in 2 years. But if you have any doubt, then exchanging currency now may not be reducing your risk at all. What if you exchange for EUR today, and in a year you decide (for all the various reasons that circumstances in life may change) that you will stay in the UK after all. And during that time, what if the GBP strengthened again? You will have taken on risk unnecessarily. So, if you lack full confidence in your move, you may want to avoid fully trading your GBP today. Perhaps you could put away some amount every month into EUR (if you plan on moving to an EUR country), and leave some/most in GBP. This would not fully eliminate your currency risk if you move, but it would also not fully expose yourself to risk if you end up not moving. Just remember that doing this is not a guarantee that the EUR will strengthen and the GBP will weaken. |
What can my relatives do to minimize their out of pocket expenses on their fathers estate | Consider contracting with a property management company to lease and maintain the house until it can be sold. Rent on the property should cover the mortgage, property taxes, etc. The property management company can handle maintenance and the tenant would be responsible for utilities. |
Setting a trailing stop loss at $39.70 bid price, stock sold at $41 | There could be a number of reasons: The price hit your number ($39.70) but by the time your order hit the market, the price had gone up. Perhaps the stock went up between when you placed the stop loss and when the order was executed. A trailing stop loss will ratchet up: Very simply, the trailing stop maintains a stop-loss order at a precise percentage below the market price (or above, in the case of a short position). The stop-loss order is adjusted continually based on fluctuations in the market price, always maintaining the same percentage below (or above) the market price. |
what are the pros and cons of structured deposits? | With reference to the UK: Structured deposits should not be confused with structured products. Structured deposits are often, quite simple deposit accounts. You place your money into what is essentially a deposit account, and are therefore guaranteed not to lose your capital as with any other deposit account. The attraction is that you could earn more than you would in a normal deposit account, often around double, due to indirect exposure to the markets. Another benefit is that structured deposits can form part of your annual cash ISA allowance, so the returns can be tax free. These products are popular with those who have savings which they are happy to deposit away for between 3 and 6 years, and are looking for better rates of return than standard cash ISAs or savings accounts. The main drawback is that you may not receive anything other than your original deposit. That poses a minimal risk if your savings are earning less than 1% currently. See my article at financialandrew.blogspot.co.uk/2013/03/fed-up-with-low-returns-from-cash-isas.html for a more rounded overview of the structured deposits. |
How do rich people guarantee the safety of their money, when savings exceed the FDIC limit? | With a lot excess cash you eventually have two goals: Since interest on cash bank deposits does not exceed inflation and you have currency risk, you may want to get into other asset classes. Options that might be, but not limited to are: |
How can the Samsung Upgrade Programme offer 0% APR? | This is more a question about economics than about personal finance. The answer, though, is straight-forward. Samsung makes enough profit on the phones that they are willing to eat the costs of a 0% loan, with the attendant risk of non-payment and the loss due to inflation. By offering financing, they expect to sell more phones. So, it's a slight cost to Samsung, but one they can easily afford due to the markups and increased volume of sales. |
Can you buy gift cards at grocery store to receive a higher reward rate? | In a similar situation I wrote about How I Made $4,000+ on a Cash Back Credit Card Offer. The total was actually $4550, and was from an insane offer from a new credit card my bank advertised. 10% cash back on all spending during the first 90 days. I wondered if gift card purchases counted, and more than store cards, I saw that Visa gift cards with a $500 value sold for a $4.95 fee. A 1% hit. It would have been foolish to load up, and realize that they were somehow excluded, so I bought 2 and followed the transaction on line. When I saw the 10% credit, I went full steam, and bought these, $2000 at a time, as that was the limit CVS imposed. In the end, I stopped at $50,000. (And the bank killed the online offer about $25K into this, but still honored my 90 days) Yes, I had to make payments mid cycle to avoid the card limit ($20K), but in the end, the bit of effort paid off. It took a bit over a year and a half to burn through them. In hindsight, I'd do it for $100K if the opportunity came up. Cash in the bank is earning near zero. TL:DR Make a small purchase and confirm your card gives you the bonus you expect. |
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